Shorten drawn in to 'inappropriate' fund controversy

Ben Schneiders and Royce Millar

THE controversy around the Australian Workers Union's current day slush fund has drawn in senior cabinet minister Bill Shorten, who last month described such funds as ''inappropriate'' and ''out of bounds''.

For two days Mr Shorten has refused to directly answer questions about the appropriateness of Industry 2020, a current AWU-linked slush fund used to bankroll Labor factional battles including elections within the disgraced Health Services Union.

Mr Shorten has attended at least two fund-raising functions for Industry 2020 since it was established in 2008 by his successor as AWU state secretary, Cesar Melhem. Then deputy prime minister Julia Gillard was the guest speaker at the fund's inaugural fund-raiser at Flemington racecourse in 2008.

''These slush funds according to Bill Shorten are inappropriate, that's what he said on ABC TV, yet here he is going along to the very functions that raise money for these slush funds but without disclosing it to anyone, especially in the last week of the Parliament,'' he said.

On Tuesday Mr Melhem confirmed the fund had raised about $500,000 to support the political activities of the right Labor sub-faction of which Mr Shorten is a leading figure.

Last month Mr Shorten attacked the setting up of another AWU-linked fund from the 1990s, for which Julia Gillard did the legal work, and which was later allegedly rorted by then AWU officials Bruce Wilson and Ralph Blewitt.

In comments to the ABC, Mr Shorten's reasoning appeared to be that the fund was inappropriate because it was not authorised by the AWU.

''Oh, well, that account was unauthorised by the union and it was an inappropriate account, that account, as far as I can tell. So that was out of bounds,'' Mr Shorten said on the ABC.

But like the earlier slush fund Industry 2020 was also established outside the AWU. Mr Melhem is now its sole director.

Last night a spokesman said Mr Shorten did not know that Industry 2020 had been used to fund candidates from the HSU's 2009 election.

''The minister is not aware of any allegation of the law or rules being broken and if The Age has any such allegations then it should be brought to the attention of the authorities,'' he said.

ACTU secretary Dave Oliver also did not directly respond to questions on the appropriateness of the fund.

Senator Abetz also said it was ''completely unacceptable'' for the then deputy Prime Minister Julia Gillard to have delivered a speech at the Flemington racecourse lunch in 2008. That event raised about $250,000 with nearly half that profit.

Senator Abetz said Ms Gillard should have known what the money was being raised for. ''Excuse me, deputy prime ministers don't go to functions without knowing who the organisers are and ultimately what the money is going to be used for,'' he said. ''I have no doubt either her office is greatly incompetent or she knew exactly what she was doing.''